Friday 6 May 2011

Maximizing Value of Mature Products

A strategy for building strong contract manufacturing partnerships

Pillar5 Pharma Inc. has emerged as a new entry in the contract manufacturing arena. They are a relatively small Canadian based company, manufacturing for Canadian and global markets from a former Pfizer facility in Arnprior, Ontario.

In seeking new business they have developed a strategy to work with customers to maximize the value of mature brands. This strategy is supported by:
  • Providing regulatory and product development support to standardize and optimize product formulations, to support a robust manufacturing process that can be registered for multiple markets
  • Applying Lean manufacturing principles to the production process to maximize value for the customer
  • The capability and flexibility of scale to provide large or small volumes of product
  • A flexible pricing structure that enables customers to share in the cost benefits of volume consolidation while providing maximum flexibility as volume erosion of mature brands begins.
“We would like to supply innovative and growing products to our clients” says John Carkner, President of Pillar5 Pharma, “but we also see a niche opportunity in doing a great job in supplying mature products. With trends like corporate consolidation and increasing numbers of competitive products, there are many products that still serve a need in the market place, but no longer generate the volume of production that lends itself to high-volume facilities.”

For example, Pillar5 Pharma recently prepared a proposal that represented great value for a customer who had lost exclusivity on a patented product. By consolidating volume for multiple global markets and passing the volume benefit on to the customer through stratified pricing, Pillar5 was able to reduce cost-of-goods by over 40%. This was driven by:
  • Process streamlining and standardizing to one presentation for multiple markets
  • Application of NIR (near infra-red) analytical capability to reduce cycle time and analytical cost
  • Applying the favourable cost structure attendant on Pillar5 Pharma having purchased the Arnprior facility at nominal cost
  • Developing a flexible pricing structure that compared favourably to the customer’s internal costs, but provided the added benefit of allowing the customer to reduce fixed overhead by outsourcing
  • An understanding of global regulatory expectations, and the ability to satisfy those requirements

“We like to think of ourselves as problem-solvers for our clients” Carkner went on to say. “By adapting the wide range of production scale available at our facility, we can help customers find additional value in brands that might otherwise be only marginally profitable, or even discontinued.”

Pillar5 Pharma prides itself on providing world-class quality at a competitive price. The facility has been in operation for over 50 years, and that experience, coupled with contemporary understanding of Lean and Six-σ process optimization, lends itself to reliable customer service.

There is a belief in some quarters that production can be cheaper in low-cost locations around the globe. While this may be true for large volume products purchased on a frequent basis, it raises logistics and service issues on the maturing brands that represent a large proportion of many customers’ product portfolios. Pillar5 Pharma believes that they can better serve the needs of these customers through frequent communication and rigorous attention to their needs.

“In my past experience, the bottom 20% of products by volume represented more than 80% of the product supply problems” said Carkner.  “By specializing in these products, we believe we can offer great value, and extend the life of products that still have the potential to contribute to our customers’ business.”